Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 5:  Fair Value Measurements

We define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following fair value hierarchy classifies the inputs to valuation techniques used to measure fair value into one of three levels:

·   Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

·   Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

·   Level 3: Unobservable inputs that reflect the reporting entity's own assumptions.

The following tables present, by level within the fair value hierarchy, certain of our financial assets and liabilities:

	Balance at		Basis of Fair Value Measurements
	March 31,
($ in millions)	2012		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	26.4	$	26.4	$	-	$	-
Deferred compensation assets		3.6		3.6		-		-
	$	30.0	$	30.0	$	-	$	-
Liabilities:
Contingent consideration	$	2.3	$	-	$	-	$	2.3
Deferred compensation liabilities		5.4		5.4		-		-
Foreign currency contracts		0.5		-		0.5		-
Interest rate swap contracts		8.2		-		8.2		-
Long-term debt		289.5		-		289.5		-
	$	305.9	$	5.4	$	298.2	$	2.3

	Balance at		Basis of Fair Value Measurements
	December 31,
($ in millions)	2011		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	26.5	$	26.5	$	-	$	-
Deferred compensation assets		3.3		3.3		-		-
	$	29.8	$	29.8	$	-	$	-
Liabilities:
Contingent consideration	$	2.1	$	-	$	-	$	2.1
Deferred compensation liabilities		4.6		4.6		-		-
Interest rate swap contracts		8.8		-		8.8		-
	$	15.5	$	4.6	$	8.8	$	2.1

Short-term investments, which are comprised of certificates of deposit and mutual funds, are valued using a market approach based on quoted market prices in an active market. Deferred compensation assets are included within other current assets and are also valued using a market approach based on quoted market prices in an active market.

The fair value of deferred compensation liabilities is based on quoted prices of the underlying employees' investment selections and is included within other long-term liabilities. The fair value of our foreign currency contracts is included within other current liabilities and is valued using an income approach based on quoted forward foreign exchange rates and spot rates at the reporting date. Interest rate swaps are valued using a discounted cash flow analysis based on the terms of the contract and observable market inputs (i.e. LIBOR, Eurodollar forward rates and swap spreads). Refer to Note 4, Derivative Financial Instruments, for further discussion of our derivatives.

Level 3 Fair Value Measurements

The fair value of the contingent consideration was determined at the acquisition date using a probability-weighted income approach, and is revalued at each reporting date or more frequently if circumstances dictate. Changes in the fair value of these obligations are recorded as income or expense within restructuring and other items in our condensed consolidated statements of income. The significant unobservable inputs used in the fair value measurement of our contingent consideration are the sales projections, the discount rate and the actuarial adjustment factor used in our calculation. Significant increases or decreases in any of those inputs in isolation would result in a significantly lower or higher fair value measurement.

The following table provides a summary of changes in our Level 3 fair value measurements:

	($ in millions)
Balance, December 31, 2011	$	2.1
Increase in fair value recorded in earnings		0.2
Balance, March 31, 2012	$	2.3

Refer to Note 2, Restructuring and Other Items, for further discussion of acquisition-related contingencies.

Other Financial Instruments

We believe that the carrying amounts of our cash and cash equivalents, accounts receivable and short-term borrowings approximate their fair values due to their near-term maturities.

Quoted market prices are used to estimate the fair value of publicly traded long-term debt. The fair value of debt that is not quoted on an exchange is estimated using a discounted cash flow method based on interest rates that are currently available to us for debt issuances with similar terms and maturities. The carrying amount and estimated fair value of long-term debt was $294.9 million and $289.5 million, respectively, at March 31, 2012, and $299.3 million and $279.2 million, respectively, at December 31, 2011.